Inflation falls to the year's new low

JAKARTA (JP): Inflation fell to this year's low of 0.24 percent in April after reaching its peak of 1.76 in February.

Minister of Information Harmoko told reporters that last month's low inflation was caused mainly by a 0.71-percent decline in food prices.

He made the announcement after a limited cabinet meeting on economy at the Bina Graha presidential office here yesterday.

"The prices of eggs and milk, for example, dropped by 7.14 percent, meat by 2.76 percent, grains by 2.47 percent and fish by 0.83 percent last month," he said.

Substantial increases in food prices due to the interruption of transportation by floods caused inflation to reach 1.25 percent in January and 1.76 percent in February before falling back to 0.7 percent in March.

Harmoko said housing prices increased by 0.9 percent last month, clothing prices by 0.29 percent and the prices of other goods and services by 0.6 percent.

"In spite of the drop in the inflation rate from last month, President Soeharto reiterated his instructions that all government institutions should continue their efforts to lower the growth rate of consumer prices in the coming months," he said.

Economists have expressed concern that the high inflation in the first three months of this year, the government's plan to accelerate the depreciation of the rupiah against the U.S. dollar, and the increase of U.S. interest rates, has encouraged money owners to save their funds in U.S. dollar deposits, thereby causing capital flights.

Exports

Harmoko said the cabinet meeting also discussed the country's exports and imports. Exports increased to US$2.79 billion -- including non-oil exports of $706 million -- in February from $2.65 billion in the previous month. Imports rose to $2.15 billion from $2.05 billion.

"The country, therefore, enjoyed a trade surplus of $649.2 million in February," he said.

Last year at the same time, Indonesia enjoyed a trade surplus of $1.08 billion, with net exports worth $2.95 billion and net imports worth $1.88 billion.

Harmoko said the President warned that Indonesia's trade surplus with six of its 20 major trade partners -- Japan, Singapore, Hong Kong, China, Thailand and the United Arab Emirates -- was decreasing steadily in the last 11 months.

Indonesia even started to suffer deficits in January in its trade with Saudi Arabia and Italy, which caused a surplus beforehand, the minister said.

Soeharto called on his cabinet to look for the causes of the decline in Indonesia's exports to those countries and take the necessary steps to increase them in the future, Harmoko said.

The minister said the Indonesian money supply -- in terms of currency and demand deposits-- declined by almost four percent to Rp 38.45 trillion ($17.9 billion) as of March from Rp 40.04 trillion as of February. (riz)